Headline: December Sees Significant Housing Price Increase; Experts Predict Strong Gains in 2025
Subheading: Norwegian Market Witnesses Surprising Price Boost; Norwegian Bank Set to Cut Rates in March
Article:
Housing prices in Norway witnessed an unexpected surge in December, with prices increasing by 0.1 percent from November, according to figures from Eiendom Norge. This marks the strongest price increase for the month of December since 2016, with the real estate company describing the development as "kruttsterk" (explosive).
Typically, housing prices decline towards the end of the year, but the latest data shows a seasonal adjusted increase of 1 percent in December 2024 compared to the previous year. Moreover, prices in December 2024 were 6.4 percent higher than in December 2023.
Administering Director Henning Lauridsen of Eiendom Norge attributes this unusual December uplift to several factors, including the company’s expectation of a 10 percent national price increase and 12 percent growth in Oslo in 2025, as well as a historically low number of completed new homes expected in 2025.
"Boligkrisen" (housing crisis), long anticipated due to the shortfall in new home completions, is now set to hit, Lauridsen predicts. He expects the crisis to intensify throughout 2025.
Nordea’s senior macro and interest strategist, Sara Midtgaard, echoes Lauridsen’s optimism, citing several reasons for the robust December performance. She believes that heightened optimism about future housing price trends, lower capital requirements effective from January 1, and a reduction in unsold properties have all contributed to the strong market.
Midtgaard forecasts a robust January, predicting a nominal price increase of over 4 percent, similar to the anticipated 2025 wage growth.
Karine Alsvik, a macroeconomist at Handelsbanken, also praises December’s "unusual price boost," emphasizing January’s potential for strong performance.
On a regional level, Bodø with Fauske recorded the strongest seasonal adjusted price increase in December (2.5 percent), while Follo had the most subdued increase (-0.5 percent). Notably, Bergen showed the most significant annual price increase in 2024 (13.1 percent), while Fredrikstad/Sarpsborg had the most modest rise (1.8 percent).
Analysts expect the housing market’s upward trajectory to continue in 2025. Lauridsen emphasizes the combined impact of Norges Bank’s impending rate cuts, strong wage growth, constrained supply of housing units, and lowered capital requirements.
Midtgaard anticipates a particularly strong spring, with Oslo expected to be significantly affected by changes in capital requirements.
